Effective Price

The effective price is the price at which a commodity is sold or bought after the hedge has been lifted (liquidated). It can be calculated either by adding/substracting the basis change to the original cash price, or by adding/substracting the hedge of the futures (the original futures price at the time the hedge was placed minus the futures price at the time the hedged was lifted) to the final cash price.

If a short hedger has made a profit, the effective cash price will be higher than the original cash price being hedged. If a long hedger has made a profit, the effective cash price will be lower than the original cash price being hedged.